Oil & Gas News

Shell, Venezuela LNG Agreement Stalled

Shell PLC and Venezuela’s state oil company, PDVSA, are currently at a standstill over how much to charge for future shipments of liquefied natural gas (LNG). This disagreement is affecting a deal involving Shell and the National Gas Company of Trinidad and Tobago to operate a gas field in Venezuelan waters.

Trinidad wants to use gas from Venezuela’s Dragon offshore field, which has a lot of gas (4.2 trillion cubic feet), to increase its exports of LNG and petrochemicals. These exports have been low recently because Trinidad hasn’t had enough gas. The Dragon field is located near the maritime border between Venezuela and Trinidad.

Mineral Rights, Sell Mineral RightsThe government of Venezuela has told Trinidad and Tobago that it won’t give Shell and the National Gas Company a license to work in the Dragon field until Shell and PDVSA agree on the future prices of LNG.

Shell thinks that LNG prices will be low until 2050. However, Venezuela believes that prices will remain high in the long term, especially in Europe and Asia, according to some analysts.

Shell, the National Gas Company, PDVSA, and Trinidad’s energy ministry haven’t responded yet to requests for comments on this issue.

Trinidad’s Prime Minister, Keith Rowley, mentioned last week in a press conference that there are some complications with the Dragon deal, but his government doesn’t have control over it. He said that Trinidad isn’t relying only on this deal.

The plan was to get the license approved by the end of December. This was after the U.S. gave permission in January, and the main terms were agreed upon.

The deal would allow for 300 million cubic feet per day of gas from Venezuela to be sent to Trinidad for making LNG starting in late 2026. An additional 50 million cubic feet per day would go to petrochemical plants. Shell would have a 70% stake in this project, and the National Gas Company would have 30%.

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Trinidad’s main LNG project, Atlantic LNG, can process a lot of gas into LNG for export. But last year, it didn’t produce as much as it could because one of its processing units was not in use. This project is important for Shell, as it makes up a significant part of their total LNG production.

Venezuela has the largest gas reserves in Latin America, and Trinidad is the region’s top LNG exporter. Working together, they could meet each other’s needs in producing and exporting gas.

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